Agenda item

The Head of Internal Audit will submit a report prefacing the annually reviewed and revised Internal Audit Charter and Strategy.

The Head of Internal Audit submitted a report prefacing the annually reviewed and revised Internal Audit Charter and Strategy.  It was explained that there is a requirement to review the strategy annually and that this is a generic charter and strategy.  There are no significant changes other than it is now more explicit regarding the delivery of the function in line with the risk profile of client organisations, linked to financial pressures.  The service constantly strives to ensure that management are supported in the correct way using a ‘right first time’ approach.  As the risk profile of the Council changes in the medium and long term it will be essential to ensure that the right resources are in place to deliver that work.  This will be reviewed and monitored.  It was highlighted that last year’s relationship with organisations and services has been reflected upon.  Effective face to face communication with Managers is essential rather than relying on email communication.

The Audit Committee considered the Internal Audit Charter and Strategy and raised a number of questions.

A member referred to client organisations who receive an internal audit functions and queried if providing this level of service was a significant drain on resources.  Reassurances were given that the external income generated more than covers costs and has paid for Council savings in past years.  Furthermore, the18 FTE staff have the capacity and flexibility to deliver this level of service to external organisations whilst also fulfilling the Council’s requirements.  If extra capacity was needed a recruitment exercise would be undertaken.  Organisations such as the Police have their own mechanisms to investigate potential fraud although the Corporate Anti-Fraud Team (CAFT) can act in an advisory capacity.

A query was raised regarding the difference between the audit work undertaken on behalf of the South Yorkshire Police Chief Constable and the South Yorkshire Police and Crime Commissioner.  It was explained that there is a slightly artificial distinction between the two bodies but that each is required to produce an annual governance statement and statement of accounts.  Both bodies use the same internal auditor and have the same audit committee and will in the future be managed as a whole.

A Member asked if the changing balance of work as schools convert to academies would lead to a significant loss of work and associated risk to the function.  It was reported that there will be no loss of work as schools comprise only a small percentage of audit work.  However, this could be an opportunity to develop a marketing strategy to offer internal audit services to schools using the function’s existing expertise and experience.  Similarly, the amount of work carried out for the Sheffield City Region (SCR) is small at the moment but is likely to increase in the future.  

It was explained that the impact of budget changes and future pressures is closely monitored to ensure that resources are adequate to provide an effective service.  The level of financial resources available governs the number of people and days which can be applied to the audit function.  If less resources are available a risk based approached is used.  The views of External Audit have been sought regarding level of resources but there is no formula to determine this.  The service provided is of high quality, competitively priced and in line with other local authorities.  Further opportunities to work for external organisations are explored. 

A query was raised regarding the Corporate Anti-Fraud Team (CAFT) 600 allocated days.  It was explained that this focussed on the needs of the Council, although the service could be provided to external clients if required.  The Police and Fire Service have their own internal mechanisms for dealing with fraud, although the CAFT can act in an advisory capacity.  

Members were satisfied that the Internal Audit Charter and Strategy adequately represented and described the function and that the delivery of the Strategy provided the assurances the Committee require from Internal Audit regarding the effectiveness of the function.

RESOLVED:

(i)         That the report be noted.